N.J. task force report slams George Norcross’ testimony on tax credit awards

A New Jersey task force on Thursday challenged claims made by political power broker George E. Norcross III about tax credits awarded to several businesses, citing new evidence of “potential inaccuracies” in testimony that Norcross gave to state senators in November.

For Cooper Health System, where Norcross chairs the board of trustees, the task force said previously undisclosed emails add to evidence that Cooper was awarded nearly $40 million worth of incentives “in error," and should have qualified only for $7 million in tax credits, according to the 84-page task force report on the state’s multibillion-dollar incentive programs.

For three companies that collectively won $245 million in tax credits, including the Conner Strong & Buckelew insurance brokerage that Norcross leads, investigators said that, despite Norcross’ testimony that each firm genuinely “considered moving out of state,” new evidence "further demonstrates that these companies did not sincerely consider their claimed alternative sites.”

A spokesperson for Cooper Health said that Cooper “did nothing wrong in its application for tax credits,” and that the task force was “cherry picking” emails to make its case.

Norcross, through a spokesperson, said: “This final report reads as a justification by someone who has billed state taxpayers in excess of $11M and is defensive about being sued by the same companies he’s smearing. ... We — my firm and its partners — have always complied with the letter and the spirit of the law.”

Investigators also outlined a series of flaws in the award process at the Economic Development Authority, the state agency that approves incentives for businesses. The EDA had a culture of “getting to yes” when companies applied for tax credits, the report said, and in some instances, staff “were warned against or even criticized for asking ‘too many questions’ of an applicant.”

The task force also found that the EDA had “inadequate" procedures for determining whether a company’s jobs were actually “at risk” of being moved to a state other than New Jersey, a determination that can affect the size of a tax-credit award. “There is powerful evidence that at least some companies have ... [obtained] millions of dollars in tax incentives premised on threats to relocate to out-of-state locations that, in reality, were never genuinely under consideration,” according to the report.

Once the EDA had awarded the tax incentives, its processes for certifying that companies lived up to their pledges to create jobs relied “too heavily” on data that businesses themselves provided “and may have resulted in improper or inflated awards.”

The report comes a year after the state comptroller found “significant” oversight problems at the EDA, and Gov. Phil Murphy appointed a special task force, chaired by Rutgers law professor Ronald Chen, to investigate further. The task force’s activities – holding public hearings, calling witnesses, and issuing an interim report in June – inflamed a political fight between Norcross and Murphy, both Democrats.

Norcross has long championed the tax-credit program as a boon for the impoverished city of Camden, and maintains he’s been unfairly targeted by the task force. Under legislation that passed with broad support in 2013, and that Gov. Chris Christie signed into law, the Economic Development Authority approved about $1.6 billion worth of tax credits for companies willing to move to or expand in Camden.

Tax-credit awards to companies are doled out over 10 years. Companies can use the credits to offset their tax bills, sell the credits for cash, and leverage them to secure bank financing.

Norcross’ insurance brokerage partnered with the logistics company NFI and the housing developer the Michaels Organization to build a waterfront office tower with their $245 million incentive package.

All three companies, along with Cooper Health, sued the governor last spring and attempted to halt the release of the first task force report. Issued in June, the report found that “special interests” shaped the law, such that it favored “certain parties while disfavoring others.” Both in the report and during an earlier public hearing, investigators showed that the Parker McCay law firm, led by George Norcross’ brother Philip Norcross, drafted parts of the law behind the scenes.

When George Norcross testified before a state Senate committee in November, he said that dozens of people had input in the law, and that the “many misstatements, mischaracterizations, and outright mistruths” about the tax-credit awards were having a negative impact on Camden.

Norcross also delved into a point of contention with the task force: the question of whether his insurance brokerage was already committed to moving to Camden, well before the firm applied for an incentive award in October 2016.

The dispute stems from a September 2015 Inquirer story that reported Norcross’ company “is considering moving its headquarters” to a new development in Camden, citing an anonymous source.

Norcross testified that wasn’t the case: “The claim is based on an incorrect reading of a single newspaper article.”

But task force investigators said they obtained a memo written by Norcross spokesperson Dan Fee, before the September 2015 story ran. In the memo, Fee said he would provide an Inquirer reporter with a “preview” of the development project: “‘Sources’ will confirm that local partners, including YOU, will consider moving their companies to Camden under the Grow NJ program.”

This new evidence, investigators said, shows that the companies “were already formulating plans to relocate to Camden” a year before they applied for the tax credits.

Cooper Health, meanwhile, has contended that it never told EDA officials that its jobs were “at risk” of leaving New Jersey, and that it only provided the EDA with information on an alternative location in Philadelphia because EDA staff requested it. Norcross testified that Cooper was “clear” about staying in New Jersey, the task force report said.

But investigators said that newly obtained emails are “inconsistent” with that position. In one email, written days before the EDA approved Cooper’s tax-credit award in December 2014, a Cooper Health official said that he had toured a Philadelphia site that day, and believed he could have a proposal by the next day "that provides our ‘credible threat to move’ to satisfy the EDA.”

Another email among Cooper Health executives, written the day before the EDA voted on Cooper’s application, included an attached memo, explaining that Cooper’s jobs were “at risk” of leaving the state, and that if Cooper did not receive the incentives its “main alternative option is to relocate to Philadelphia, PA.”

According to the task force report: “There is no evidence, however, that any of the Cooper Health executives who received the memorandum made any effort to inform the EDA that the health system was not, in fact, considering a potential relocation to Philadelphia.”